QIM 32  |  Part 3 of 5  |  Elder Law & Medi-Cal Planning

A revocable trust does one job extremely well and a different job not at all.

A conversation between Ava and Michael

Ava: Families tell me they have a living trust from years back and assume they are covered.

Michael Benavides, Esq.: Covered for what the trust was built to do — avoiding probate, controlling distribution. Frequently not covered for long-term care. CANHR is unambiguous: holding assets in a revocable living trust does not make them exempt from the returning asset limit.

Ava: Why not?

Michael Benavides, Esq.: Because of the word revocable. If your mother can amend it, revoke it, sell the assets and take the money back tomorrow, then for eligibility purposes she still owns everything in it. She holds the key to the container.

Ava: So make it irrevocable?

Michael Benavides, Esq.: Here is where I have to be careful. Moving assets into an irrevocable structure is generally a transfer. Done on or after January 1, 2026, it can start the clock. You may be trading a future eligibility problem for a present penalty exposure.

Ava: Is there a clean rule for when it is worth it?

Michael Benavides, Esq.: No, and I am not going to invent one. It turns on time horizon, the specific trust language, whether the person is nursing-home-bound or community-based, what is actually in the trust, and whether the transfer clears the thresholds we covered in Part 2. This is genuinely one of the grayest areas in California elder law right now and practitioners are still working out how the reinstated rules interact with pre-2026 structures.

Ava: I want to underline that for readers. This is a complicated matter and it is unsettled. If anyone reading has an irrevocable trust question, that is a sit-down-with-counsel question, not a read-an-article question.

Michael Benavides, Esq.: That is the right instruction. What I can say with confidence is the direction of the trade-off: planning done early has room to work. Planning done in a crisis is damage control.

Ava: Is there something more urgent than the trust question?

Michael Benavides, Esq.: Two things, and both outrank it. Capacity — if cognition is declining there is a closing window in which a person can validly sign anything. And a durable power of attorney for finances. Without it nobody can act, and the family ends up in a conservatorship that costs more than the planning would have. Those two are rarely wrong to do and are frequently left undone.

Ava: And if the family does not agree on who should act?

Michael Benavides, Esq.: Address it while the parent can still state their own intent. A contested trusteeship during a care crisis is slow and expensive, and the care need does not pause while it resolves.

Disclaimer

Attorney advertising. General information about California law, not legal advice; reading it creates no attorney-client relationship. Medi-Cal eligibility is highly fact-specific, published figures including the asset limits, the Community Spouse Resource Allowance and the Average Private Pay Rate are updated periodically, and some points in this series are expressly identified as unsettled. Confirm current rules with DHCS or your county Medi-Cal office before acting. Michael Benavides, Esq. — California State Bar No. 270714. Ava Benavides is an editorial brand voice, not an attorney, and does not provide legal analysis.